Apple’s Tim Cook visits China to talk expansion, expansion, expansion

Apple sees China as a huge market that has plenty left to be tapped.

Apple CEO Tim Cook has been making good on his goal to grow Apple's presence in the Chinese market. Cook made a trip to China this week to meet with various executives and government officials, undoubtedly to push Apple's retail and mobile presence within the country. Though Cook's exact itinerary hasn't been made public, the world's largest mobile provider China Mobile has revealed that Cook paid the company a visit to discuss "matters of cooperation," according to Reuters.

In addition to his meeting with China Mobile, Cook also met with China Unicom and China's minister for industry and information technology and other high-ranking officials. And as noted by TheNextWeb, Cook has paid visits to various Apple resellers and has already confirmed that the iPad mini with cellular capabilities will launch in China by the end of January. (Currently, only the Wi-Fi version is available there.)

Cook said in an interview with Tencent Digital (English translation) and other Chinese news outlets that he expects Apple to have "far greater" than 25 of its own retail stores in mainland China and Hong Kong, but the company has learned since the launch of its first stores that the retail area needs to be much larger to serve more customers.

"Currently, Apple has 11 stores in the Greater China region, as well as many resellers. We will continue to expand in China and the number of retail stores we'll have will exceed 25," Cook was quoted saying.

Cook has long made visits to China as part of his previous position as COO. Since becoming CEO in 2011, however, Cook has spoken openly on fiscal calls about the company's ambitions in China, most recently highlighting that China made up ~15 percent of Apple's revenues for fiscal 2012 at $23.8 billion for the year. "[This] is really phenomenal when you think about it," Cook said during the company's fourth quarter conference call in October 2012. "That's up over $10 billion year on year."

A low cost phone from Apple isn't really a farfetched idea. It would be vital to consolidate the Chinese market which would solidly establish Apple's ecosystem in the region.

It don't think its roll out is immanent but soon enough. It will be curious to see how they put forward an uncompromised device that still hits a lower price point.

I agree. I think Apple is playing the long game here. They have per-unit profit margin aplenty to play in, and even if a low-cost, low-margin handset is not the 'Apple' thing to do, they need to establish a mindshare and business foothold in a potentially huge, huge market in anticipation of the day when they can sell a higher-cost, higher-margin handset to that market.

A low cost phone from Apple isn't really a farfetched idea. It would be vital to consolidate the Chinese market which would solidly establish Apple's ecosystem in the region.

It don't think its roll out is immanent but soon enough. It will be curious to see how they put forward an uncompromised device that still hits a lower price point.

Apple has the slight advantage that iOS can get away with much less CPU power and RAM than Android, which should help a bit. So use the innards of the 4S, slap on a 5" screen with the resolution of the iPhone 5, wrap it in a cheaper (but still solid and nicely designed) polycarbonate case, accept smaller margins (and make up for this with more copies sold) and offer it for about $300. Still expensive in that market, but less than half of what the iPhone 5 costs. The BOM for the 4s is about $188 and a larger display with a cheaper case should even out, so you're still making good money on these things if this enables you to sell 50 million or so of them.

There comes a point when even the most successful company stops growing as rapidly as Apple has been growing. Markets do get saturated. "Expansion, expansion, expansion" sounds like a recipe for disaster to me. Why would Apple want to do this except to appease greedy investors who demand double-digit growth every year or they have seizures. Based on the stories I've heard recently about botched repairs and stupid geniuses, it seems to me that Apple has already expanded beyond the point where the quality of their products and services can be reliably maintained. If they get even bigger... Watch out!!!

A low cost phone from Apple isn't really a farfetched idea. It would be vital to consolidate the Chinese market which would solidly establish Apple's ecosystem in the region.

Exactly, I think that's the main thrust of the low cost iPhone. I personally think low cost iPhone would receive relatively sedate reception in western market but important to break into Chinese area and India area.

There comes a point when even the most successful company stops growing as rapidly as Apple has been growing. Markets do get saturated.

Of course, but there are still unsaturated markets to tap.

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"Expansion, expansion, expansion" sounds like a recipe for disaster to me. Why would Apple want to do this except to appease greedy investors who demand double-digit growth every year or they have seizures.

Because that's why Apple exists; they are owned by the greedy investors.

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Based on the stories I've heard recently about botched repairs and stupid geniuses, it seems to me that Apple has already expanded beyond the point where the quality of their products and services can be reliably maintained. If they get even bigger... Watch out!!!

As the world's largest PC manufacturer and most profitable mobile phone manufacturer Apple can't help but focus on China where the growth is.

Apple now sells more PCs than HP (iPad) and hauls in 70% of all mobile phone profits worldwide.

China is the market to capture.

You think so? /sEvery company on Earth is trying to expand in China.

You think so? /sApple is one of the few largely profitable, successful, international companies to do so.

That's not necessarily because Chinese market itself is that particularly hard to break into. It's mainly because Chinese officials are one of the most corrupt bunch in the world and it takes big bank to bribe them enough to allow big business.

There comes a point when even the most successful company stops growing as rapidly as Apple has been growing. Markets do get saturated. "Expansion, expansion, expansion" sounds like a recipe for disaster to me. Why would Apple want to do this except to appease greedy investors who demand double-digit growth every year or they have seizures. Based on the stories I've heard recently about botched repairs and stupid geniuses, it seems to me that Apple has already expanded beyond the point where the quality of their products and services can be reliably maintained. If they get even bigger... Watch out!!!

But the market for smartphones/tablets/phablets is NOT saturated. Far from it. It's like a market for TV sets in which only 20% or so (globally) already have one. And if you've learned your lesson from even Third World markets which frog-leaped the age of landlines from nothing into cellphones, you just have to understand that the market for these devices is bound to expand like a gas into a vacuum. It's just a matter of being able to supply the gas at bearable prices.

But I agree with you with regard to profits. People buy Apple stock not because of Apple's profits. They buy it because Apple's stock was rising and was a good investment. Profits were just an indicator for success, but market share while maintaining positive margins is even a better indicator. People don't get a cut of the profits. It's more a matter of trust in further growth than profits. Apple needs to expand market share and mindshare and sold devices, not profits. Very few people actually get something out of Apple's profits, these shouldn't be a major concern as long as they stay positive. Hell, even if Apple's profits would turn negative for a while and for good reasons, Apple has a lot of fat to burn. More than $100B worth of it. It's the future to be concerned about, not the profits.

Apple's been paying dividends so technically we are getting some of Apple's profits.

Yes, since a short while and a tiny bit of it. Certainly less than what you've lost by Apple's stock plummeting lately (I own no Apple stock). Apple's stock soaring would get you more than that teeny weeny dividend. I guess.

Apple has painted itself into a tight corner by letting itself being forced into making more and more insane profits. It's actually disgusting, really. What do you do with more than one hundred billion dollars? Well, you could mint a coin from it. Or fly to mars.

Apple's been paying dividends so technically we are getting some of Apple's profits.

Yes, since a short while and a tiny bit of it. Certainly less than what you've lost by Apple's stock plummeting lately (I own no Apple stock). Apple's stock soaring would get you more than that teeny weeny dividend. I guess.

I haven't sold my stock so I haven't 'lost' anything any more than soaring stock would get me anything.

On the other hand the dividend has given me cash and more Apple stock; and investing dividends at $520 gets me more stock than investing dividends at $700.

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Apple has painted itself into a tight corner by letting itself being forced into making more and more insane profits. It's actually disgusting, really. What do you do with more than one hundred billion dollars? Well, you could mint a coin from it. Or fly to mars.

Apple's been paying dividends so technically we are getting some of Apple's profits.

Yes, since a short while and a tiny bit of it. Certainly less than what you've lost by Apple's stock plummeting lately (I own no Apple stock). Apple's stock soaring would get you more than that teeny weeny dividend. I guess.

I haven't sold my stock so I haven't 'lost' anything any more than soaring stock would get me anything.

On the other hand the dividend has given me cash and more Apple stock; and investing dividends at $520 gets me more stock than investing dividends at $700.

Quote:

Apple has painted itself into a tight corner by letting itself being forced into making more and more insane profits. It's actually disgusting, really. What do you do with more than one hundred billion dollars? Well, you could mint a coin from it. Or fly to mars.

I like how you make being rich sound like a bad thing.

Well covetousness is a sin. But then again, I'm wearing clothes of mixed fibre while writing this.

There has been some speculation that Apple is considering adjusting their product cycle for the iPad and iPhone. Chief among the benefits of this is to alleviate strain on the supply chain. The idea of annual product updates has become so ingrained in consumers that they all wait to upgrade their devices and then overwhelm the supply chain during the holiday season.

Adjusting the cyclical nature of product updates could be one way Apple can enter lower price points without changing the product lineup. One idea would be if Apple were to move to 6 month iPhone updates, they could get more recent hardware into the hands of their consumers at lower prices and also halve the cyclical stress on their supply chain. Another way to think of this would be retiring old hardware a year quicker. An example of this would be an iPhone 5S in March for $650, the iPhone 5 for $550, and a very competent iPhone 4S at $450. The following fall, the markets would see a iPhone 6 for $650, iPhone 5S for $550, and a only 1 year old very capable iPhone 5 for $450. Apple could pitch a very, very good phone to consumers at a $200 discount.

Apple's been paying dividends so technically we are getting some of Apple's profits.

Yes, since a short while and a tiny bit of it. Certainly less than what you've lost by Apple's stock plummeting lately (I own no Apple stock). Apple's stock soaring would get you more than that teeny weeny dividend. I guess.

I haven't sold my stock so I haven't 'lost' anything any more than soaring stock would get me anything.

On the other hand the dividend has given me cash and more Apple stock; and investing dividends at $520 gets me more stock than investing dividends at $700.

Quote:

Apple has painted itself into a tight corner by letting itself being forced into making more and more insane profits. It's actually disgusting, really. What do you do with more than one hundred billion dollars? Well, you could mint a coin from it. Or fly to mars.

I like how you make being rich sound like a bad thing.

Well covetousness is a sin. But then again, I'm wearing clothes of mixed fibre while writing this.

No covetousness is going on. This is not a case of Apple trying to steal Lenovo's market, per se.

No covetousness is going on. This is not a case of Apple trying to steal Lenovo's market, per se.

If anything, Lenovo and Samsung et al are covetous of Apple's market.

Yeah... Definition of covetousness broads out a bit in religious/bible sense. Old testament pretty much defines any desire for excessive wealth as covetousness. In effect, pretty much everyone in capitalist economy is guilty of the sin (which is why nobody ever mentions it).

China today is about where Japan was post WWII ... if they make a national decision to focus on top-notch quality control in business, they could crank out some exceptional products. But, they don't do that unless a foreign business partner comes in and provides the quality control hand-holding (like Apple). Kind of a shame.

Why would Apple want to do this except to appease greedy investors who demand double-digit growth every year or they have seizures.

If any of you have a 401K or IRA and you get irritated when your retirement portfolio doesn't increase by enough percentage points to beat future inflation and maintain your current standard of living in the future, and if any of the funds in your retirement portfolio own tech stocks like Apple, then the "greedy investor" is you.